Patient Protection and Affordable Care Act of 2010Affordable Care Act of 2010

…and what it means to thel l demployers, employees and 

individual citizens of the CSRAindividual citizens of the CSRA 

Dr. Gordon JonesHealthYncubator.com

June 1st, 2010

Are things going to Change?

“It was the best of times, it was the worst of times,it was the age of wisdom it was the age ofit was the age of wisdom, it was the age offoolishness, it was the epoch of belief, it was theepoch of incredulity, it was the season of Light, itepoch of incredulity, it was the season of Light, itwas the season of Darkness, it was the spring ofhope, it was the winter of despair, we hadhope, it was the winter of despair, we hadeverything before us, we had nothing before us, wewere all going direct to heaven, we were all goingwere all going direct to heaven, we were all goingdirect the other way ‐ in short, the period was so farlike the present period.”

2

like the present period.Charles Dickens, A Tale of Two Cities

English novelist (1812 – 1870)

“This is a big @#$! deal!”

Quoted by VP Biden at the P i f H lth R f

Doesn’t Biden remind you of DanPassing of Health Reform remind you of Dan Quayle, VP of Bush I

Triple Legislation

P ti t P t ti d Aff d bl C A tPatient Protection and Affordable Care ActSigned by President Obama March 23, 2010

Health Care and Education Reconciliation ActSigned by President Obama March 30 2010Signed by President Obama March 30, 2010Amends PPACA and adds new  provisions

Financial Regulatory Reform Bill 2010Health Insurance Rate Authority

“The Health Reform Laws”y

The Health Reform Laws

Polling Question # 1Polling Question # 1

How surprised were you that the health reform bill was enacted?

1. Not at all surprised – I knew it would pass

2 S h t i d I th ht ‘d t2. Somewhat surprised – I thought we‘d get something, but not this dramatic

3. Very surprised – I thought it was dead after the January special election in Mass

4. Shocked – I never thought it would happen

5

Evidently just a FlatEvidently just a Flat

6

“Experts” Make Their Contributions“Experts” Make Their Contributions

1,400 Special Interest GroupsSpent $400+ Million 

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p $Lobbying Congress on Health Reform

Trust in our GovernmentTrust in our GovernmentApril 2010 Pew Family Research Poll

Eisenhower

April 2010 Pew Family Research Pollfound only 20% trust the Federal Gov’t

80% Johnson

Nixon

Kennedy

60%Reagan

Ford

BushBushCarter

Nixon

40%

eagaClinton

Obama

BushBush

20%

81960

0%1970 1980 1990 2000 2010

Trust them with statements like this?

“W h t th bill th t“We have to pass the bill so that you can find out what is in it” …. 

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fSpeaker Nancy Pelosi

Presidential Initiatives on HealthPresidential Initiatives on Health

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Presidential Initiatives on HealthPresidential Initiatives on Health

In the early 20thCentury NationalCentury, National Health Insurance efforts were killed by the AMA becausethe AMA because they believed physicians would lose their autonomy.

11

y

Post Medicare/Medicaid by Johnson

2500%

Administrators Physicians

2000%

2500%

HMO

1000%

1500% 1973

COBRAPART D2003

500%

1000%ERISA1974

19852003

HIPAA1996

0%

1970 1975 1980 1985 1990 1995 20001970 1975 1980 1985 1990 1995 2000Source: BLS & Himmelstein/Woolhandler/Lewontin Analysis of CPS Data

Shortage of Physicians

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What type of reform act is this?Polling Question # 2Polling Question # 2

What type of reform act is this?

1. Health Reform:  will we be changing the health status of individuals in the US?

2 Healthcare Reform: will we be changing2. Healthcare Reform: will we be changing the way medical services are provided in th US?the US?

3. Health Finance Reform: will we be changing the way healthcare is paid for in the US?

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the US?

WhatWhat is health insurance in the US?is health insurance in the US?

Insurance: the promise ofpromise of 

reimbursement in fcase of an 

unexpected loss 

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“BUCAH” healthcare“BUCAH” healthcare payerspayers……

Well baby check Annual Physicals

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Well baby check Annual Physicals

… compared to … compared to ……

Oil change G M b hi17

Oil change Gym Membership

“BUCAH” healthcare payers…“BUCAH” healthcare payers…

ASOASOAdministrative Services OnlyAdministrative Services Only

Serving the Self‐insured Employer

~47%18

47%

How did we get in this mess?

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How did we get in this mess?

Illness and medical bills were linked to at least62.1% of all personal bankruptcies in 2007equaling 866,000 and involving 2.346 millionAmericans

Most were middle class

60.3% of them had attended college

66.4% had owned a home;;

20% included a military veteran or active‐duty soldier

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duty soldier.

How did we get in this mess?

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H ll d thi k d t d h t

Polling Question # 3

How well do you think you understand what is in the 2,409 page legislation?

1. Very well – I‘ve read parts, all, a summary

2 P tt ll I‘ d h b t I2. Pretty well – I‘ve done some research, but I only understand a few components

3. Not very well –what I heard on the news

4 N t t ll l d t b ti i ti t d4. Not at all – glad to be participating today

5. Don‘t know

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“The Act” Affects Everything & Everybody

l h i SHealthcare Finance System

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Overall Approach

Overview

Overall Approach

Individuals must have health coverage or pay a tax/penalty (IRS regulated)

Employers with 50+ FTEs will face a taxEmployers with 50+ FTEs will face a tax penalty if they don’t cover their employees

d l b idi h l h h Federal subsidies to start up health exchanges and CO‐Ops to help the individual and small 

l hemployer purchase coverage

Many new regulations over health insurance 

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y gcompanies and employer plans

Coverage expanded

Overview

Coverage expanded

Pay for 31 of the 54 million currently uninsured

Expanded Medicaid eligibility to 133% of FPLExpanded Medicaid eligibility to 133% of FPL

Parents coverage of dependents until age 26

An individual may choose any in‐network physician (no matter the specialty) as their p y ( p y)Primary Doctor

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Effect on Medicare

Overview

Effect on Medicare

Lowers the income threshold for increased individual Medicare premium requirements

Extends the Medicare Trust to 2026 (9 yearsExtends the Medicare Trust to 2026 (9 years beyond the 2017 insolvency mark of today)

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No longer allowed

Overview

No longer allowed

Lifetime benefit limitations

Annual benefit limitations

i i di iPre‐existing conditions

Unreasonable premium increasesp

OTC drugs paid out of HSA funds

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Each state must have a health benefit exchange

Overview

Each state must have a health benefit exchange by 2014 to pool the funds and spread the risk of individuals and group health benefitsindividuals and group health benefits Not a health plan in‐and‐of themselves

A marketplace of Federally Qualified Health Plans

Oversight and rates all plans based on quality Oversight and rates all plans based on quality

IDs to IRS the employer of employees who have enrolled in an exchange planenrolled in an exchange plan

Manages employer‐provided Free Choice Vouchers for individuals to purchase through the exchange

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for individuals to purchase through the exchange

Federal Funds to assist MDs adopt Health

Overview

Federal Funds to assist MDs adopt Health Information Technology

American Recovery and Reinvestment Act of 2009 grants $48 Billion for HIT: $63,750 per provider

Health Plan must adopt HIT SOP: Allow providers to determine patient’s eligibility and financial Allow providers to determine patient s eligibility and financial 

obligation at the point‐of‐care

Requires no or minimal augmentation of paperq g p p

Provide timely status of medical claims

On 4‐1‐2014 health plans will be assessed $1 per‐life‐per‐day

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On 4 1 2014 health plans will be assessed $1 per life per day penalty for non‐compliance to HIT SOP

Cost generally agreed by CBO

The Cost

Cost generally agreed by CBO

First 10 years it will cost $938 Billion

Projected to reduce the deficit $134 Billion

i $ illi iRequires $1.072 trillion in new tax revenues

Who will payp y

138 million eligible US tax payers (2007)

~42.5 million do not net‐contribute

95.5 million will pay an additional $11,225

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95.5 million will pay an additional $11,225 in taxes over the 10 year period

Tax implications will also apply

IRS is now in the Healthcare Business

Tax implications will also apply

All taxes and penalties are driven through the IRS Code giving the IRS new power over healthcare in the US

$2 per employee per year tax to go to medical researchresearch

Increase in Medicare payroll taxes for earned i $200 000 (i d) & $250 000 (f )income over $200,000 (ind) & $250,000 (fam) 

40% nondeductible excise tax on high‐dollar 

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gcoverage plans “The Cadillac Plans”

New fees and taxes on several health care

IRS is now in the Healthcare Business

New fees and taxes on several health care‐related industries including medical device and pharmaceutical companies starting in 2010pharmaceutical companies starting in 2010

10‐percent tax on indoor tanning services

Tanning Industry

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Tanning IndustryLobbyist

P lti b i 2014 f th 50 l

Employer Plan Mandates

Penalties begin 2014 for the 50+ employer who provides:

No coverage

I d t Inadequate coverage

Excessive coverage

This health plan iscess e co e age

“Just Right”33

g

I T lk ith H lth C lt t d

What does a business owner need to do?

I. Talk with your Healthcare Consultants and your CPAs ASAP!

II. If you offer any type of coverage now, you will need to tweak it to comply with the earliest of regulations:

By 6/23/10:By 6/23/10: 35% Tax Credit for Small Businesses

Report coverage value on employee’s W‐2

Early Retiree Reinsurance program starts

34

y p g

Plan years beginning after 9/23/10:

What does a business owner need to do?

Plan years beginning after 9/23/10:

Prohibition of lifetime limits

Only restricted annual limits allowed

P hibi i i i Prohibition on rescissions

Prohibition on preexisting exclusion for p gdependents under age 19

Plans are required to offer first dollar Plans are required to offer first dollar coverage of preventative health services

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Plans to cover dependents up to age 26

Plan years beginning after 9/23/10:

What does a business owner need to do?

Plan years beginning after 9/23/10:

Prohibition of discrimination based on salary

Medical Loss Ratio limitations for plans

I l l i d i d Implement new claims admin procedures

Required coverage of emergency servicesq g g y

Individual choice of primary care provider

Required coverage of OB/GYN care

Make benefit plan details transparent

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Make benefit plan details transparent

By 2014 American citizens and legal residents

Individual Mandates

By 2014, American citizens and legal residents must purchase qualified health coverage with the exception to:the exception to:

Religious objectors 

Incarcerated individuals 

b f d bMembers of Indian tribes

Those who were not covered for a period of pless than three months during the year

People with no income tax liability37

People with no income tax liability

State’s Rights Initiatives

38

6 23 2010 $5 Billi i f d l f d ill b

High Risk Pools and Georgia  

6‐23‐2010 $5 Billion in federal funds will be provided to the states for high‐risk pools

Employers of risk pool participants will be audited to assure they were not discouraged from remaining in the company plan

John Oxendine GA Insurance Commissioner John Oxendine, GA Insurance Commissioner, declined to receive the funds because they are due to run out by 2012 which is 2 years beforedue to run out by 2012 which is 2 years before the 2014 coverage mandates kick in (also participating in the State’s Rights initiatives)

39

participating in the State s Rights initiatives)

“Transparency”

All health plans will be required to makeAll health plans will be required to make public disclosure through HHS: Claims payment policies and practices

Periodic financial disclosures

Data on enrollment and disenrollment

Data on number of claims denied Data on number of claims denied

Data on rating practices

Information on Out‐of‐Network cost sharing & payments

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Information on enrollee and participants rights

Organizational Confusion – US HealthcareOrganization Chartgof Health Reform

Confused – Implementation overload!!Don’t Panic

There will be more to come…

Only 20% of the work has been donework has been done 

thus far…

We are only at theEnd of the Beginning 

7 t 10 f—7 to 10 years of rule making and changes aheadchanges ahead.

But now is not the time!

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Consumer Operated & Oriented Plans

Locally Organized and Managed CO OPsLocally Organized and Managed CO‐OPs  Non‐profit, member‐run health insurance issuers

May not be sponsored by State or Local government or current health insurers

Must be organized under State law as a non‐profit

Must meet all State insurance regulations Must meet all State insurance regulations

All profits will be used to lower premiums and increase quality for its membersincrease quality for its members

$6 Billion will be provided for Start‐up Costs

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Loans to be repaid in 5 years

Grants to be repaid in 15 years

There is an opportunity for the CSRA

The Act has provided us the opportunity toThe Act has provided us the opportunity to take control of our own healthcare Healthcare is local!

Its paid for by local employers and consumers

Health services are provided by local health professionalsp

Families follow traditional patterns for their care or they get recommendations from their friends whothey get recommendations from their friends who have experience these providers

45

Consumer Operated & Oriented Plans

LocalE lEmployers

CO‐OP TPA/ASOLocal

C CO OConsumers

LocalHealthcare

46

Providers

So what are we doing in SCRA?

Central Savannah River Area

47

CSRA Health CO‐OP, Inc.

LocalEmployers American 

Association

CSRA CO‐OP

TPA/ASOServices

LocalConsumers600,000+600,000+

of Health CO‐OPs&

Georgia Associationf H lth CO OP

LocalHealthcare

CSRA CSRA ResidentsResidents

of Health CO‐OPs

To bring the resourcestogether on a nationalHealthcare

Providers

Physician

gbases to each state andeach community CO‐OP.

48

yGroups

AlliedHealth

Medical Supply

Thank You!

Gordon Jones, DHAwww.CSRAHCO‐OP.org

G d @H lthY b tGordon@HealthYncubator.com706‐564‐9275

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